Why Amazon’s Challenges and a Human Need for Connection Are Driving Shoppers to DTC Brands | Coronavirus Series
Editor’s Note: This article is part of a series that explores the impact the coronavirus crisis is having on the world of ecommerce. Explore daily insights surrounding the coronavirus crisis or check out these additional resources to help you navigate your marketing strategy during this time.
With hundreds of millions of people home due to widespread stay-at-home orders around the world, sales are on the rise for many online businesses. For the fifth straight day in a row (as of April 6, 2020), the proportion of ecommerce brands saying their sales are continuing to go up has increased, according to new research from Klaviyo.
During a period of downward pressure on the macroeconomy, many respondents—especially those selling “New Essentials” products like toys and hobbies, health and fitness, beauty and cosmetics, hardware, and housewares—are reporting a spike in sales. Some brands even say they’re currently experiencing record-breakingly strong performance.
Why this is happening likely varies from category to category, and even business to business, but there are two external forces that are combining to help drive these surprising results: Amazon’s struggles and an increasing human need to feel connected.
Why Amazon’s struggles are creating more opportunity for independent brands
In a recent message to the staff at Amazon, Jeff Bezos said, “This isn’t business as usual, and it’s a time of great stress and uncertainty.”
That stress is clear on several fronts.
Amazon is facing significant challenges when it comes to simply keeping its fulfillment centers operating. Concerns over protecting the health and safety of workers have led to work stoppages in (at least) New York, Chicago, and Detroit, according to the New York Post. And employee attendance at these fulfillment centers is down by as much as 30 percent, according to Quartz.
What’s more, there’s the issue of which products are actually moving swiftly (if at all) through these fulfillment centers.
Fast delivery—a core component of the value the company promises—has been eroded by a mix of overwhelming demand and disrupted supply chains. Members of Amazon Prime, who pay $119 per year for a membership and typically receive their goods in 24-48 hours, may now have to wait weeks for any product classified by Amazon as non-essential, according to the Wall Street Journal.
The freeze on certain fulfillment-by-Amazon items was originally scheduled to end on April 5th, but more recently, Amazon has said the end date is uncertain.
The impact on sellers who rely on Amazon fulfillment is significant.
A new report from Jungle Scout indicates that 66 percent of Amazon sellers rely solely on fulfillment-by-Amazon. While merchants that sell essential items may benefit amid the current circumstance, what happens to all of the other merchants and their products?
While one can’t fault Amazon for prioritizing their fulfillment center work to focus on shipping out medical supplies, personal protective equipment (PPE), and other health and safety necessities at a time like this, the operational challenges Amazon is now grappling with still leave individual consumers in the lurch—those who are thinking about refreshing their living room (and now, perhaps, their home office) or those who want to augment their comfortable work-from-home clothing collection.
So, where are those shoppers now going to make those purchases, instead? Direct-to-consumer (DTC) brands.
How a desire to feel connected is increasingly shifting consumers’ purchase habits towards DTC brands
The increasing share of online sales versus brick-and-mortar retail sales started long before the novel coronavirus struck, but there’s reason to believe that the current crisis will accelerate this trend.
“I have difficulty thinking of a scenario when after this people will spend more time in stores, which were already pretty empty before… I don’t see a world where people come out of this and say, ‘Oh, let’s go to Macy’s,’” said Javier Seara, managing partner and director at Boston Consulting Group, according to Quartz (via Non Perele).
The broad macroeconomic trend of consumers moving their purchase habits online is only part of the explanation, though.
The current crisis is also accentuating emotional drivers, like a sense of connection, that are already core to the DTC brand experience.
For some brands, this creates an opportunity—even amid a crisis.
“Now is the opportunity for DTC brands to leverage best practices and take advantage of cost-efficient media opportunities. DTC fashion brands can explore building an emotional connection with their customers, where Amazon is somewhat limited in that aspect due to the size of the company compared to some competitors,” said Mark Zamuner, CEO at growth consultancy Two Nil, according to Glossy.
Emotional connections can come from meeting the most basic needs during a time of heightened anxiety and desperation.
At UK-based ecommerce business, The Nappy Lady, which sells reusable cloth diapers and related items, sales have tripled since the coronavirus crisis started. They’ve been sparked by desperate parents who are worried about scarcity.
For Wendy Richards, a mother of three who owns and operates the business, the emotional connection with customers is mutual.
“I hate having a mother at the end of the phone and can’t help them,” said Wendy, according to the Wall Street Journal.
Creating a deep connection between their customers and their brand has played a critical role in helping Ryan Light and the team at Pistol Lake, a California-based ecommerce performance apparel company, navigate the challenges of the last few weeks.
Their community of customers has always been core to Pistol Lake, but the strength of the connection has been even more clear in recent weeks as the company communicated openly in an email about the dire financial risks it was facing (like the CEO of Nisolo also did).
Ryan said that in response to his email, “Customers reached out to ask how are [you]? How is the team?”
They also purchased—a lot. Pistol Lake generated the equivalent of a month-and-a-half of sales in a single weekend.
Pistol Lake’s customers have always been fiercely loyal but, now, they’re also fiercely caring.
“Our customers don’t want us to go away,” said Ryan.
As a driver of purchase decisions, emotional connections can also be linked to a higher purpose.
One respondent to Klaviyo’s daily survey of consumers said she’s “only shopping at places that are still paying their workers.”
In order to navigate the current crisis, some companies are, essentially, reinventing their business and their purpose.
Sweetgreen, for example, has pivoted from serving harried business professionals to catering to the needs of hospital and medical personnel on the front lines.
If you’re struggling to navigate your business through these unprecedented and unsettling times, you’re not alone. Here are a couple of pieces of advice that may be helpful to you.
First, don’t be afraid to ask for help.
Ryan and the team at Pistol Lake had spent years investing in building their community of customers and deepening those relationships. They had never asked for help or ever really needed to. But when that changed, they had established a strong sense of connection with their customers that enabled them to ask for help.
If you’re looking for insights on how to build your brand community, check out this guide.
Finally, lead with purpose.
Clear purpose and living your values should always be top priorities for any business. Today, though, when hundreds of millions of people around the world are being told to socially distance from each other, their need for connection to other people, and even to brands, is accentuated. Companies that can authentically tell the stories of their purpose, even if it’s new like Sweetgreen’s, may make disproportionate gains in this challenging time.
Looking for more information to help you adjust your marketing strategies as you navigate the coronavirus crisis? These resources may be helpful.Back to Blog Home